Archive for January, 2012
4Q11 FUNdamental Facts
- The yield on the 10-Year U.S. Treasury bond ended the year at 1.89%. This is the first time on record (60+ years) that the yield ended a calendar year below 2%.
- The Dow Jones Industrial Average crossed 12,000 on a day-to-day basis, twenty-five times in 2011. – Wall Street Journal
- There were 69 days, or about 1/3 of trading days during 2011, in which about 450 of the S&P 500 stocks, moved in the same direction. This is more days than the combined total from two other volatile years, 2008 and 2009. – Lasair Capital
- Since the NYSE began using decimals in 1996, there has never been a day that all 500 S&P stocks were up on the same day. Prior to decimalization it never happened because as many as 20% of stocks would be unchanged as the minimum move was 1/16 or 6 cents. – Segall, Bryant & Hamill
- “Risk on” and “Risk off”. On August 11, 2011 there were 498 stocks that advanced for the day (S&P 500 up 4.63%). On November 9, 2011 there were 499 stocks down for the day (S&P 500 down 3.67%). – Segall, Bryant & Hamill
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan.
For information please call (248) 373-9900.
Fourth Quarter 2011, Capital Markets Commentary
The U.S. economy continued expansion at a modest pace. Reported unemployment trended down, ending the year at 8.5%. Inflation at the consumer level fell with the Consumer Price Index declining by -0.54%. The Federal Reserve maintained its historically low Fed Funds range of 0 – 0.25%.
U.S. equity markets rebounded sharply from the abysmal third quarter lows. Value stocks outperformed growth stocks, across all capitalizations. Small cap stocks outperformed large cap stocks. All sectors of the S&P 500 posted positive returns. Energy (+18.22%), driven by a 25% increase in crude oil prices, was the best performing sector. The next best performer was Industrials (+16.61%). Telecommunications (+7.62%) was the worst performer.
The flight-to-safety into Treasury bonds diminished as investors rotated into equities. Demand for U.S. Treasuries was strong due to concerns over the Eurozone debt crisis. The best performing investment-grade bond sector was long-maturity treasuries (Barclays Long Treasury, +1.86%). U.S. credits (Barclays U.S. Credit, +1.70%) outperformed government-related debt (Barclays U.S. Government, +.84%) and mortgage-backed securities (Barclays U.S. MBS, +.88%). U.S. high yield bonds (Barclays U.S. High Yield, +6.46%) outperformed all bond sectors by a wide margin.
Foreign equity investors received some relief with positive returns for both developed and emerging stocks. Emerging markets (MSCI Emerging Markets, net, +4.42%) outperformed developed markets (MSCI EAFE, net, +3.33%). European stocks (MSCI Europe, net, +5.39%) rallied as European lenders attempted to address the growing default crisis. Pacific region stocks (MSCI Pacific, net, -.30%) fell as Japan’s economy continued its slow recovery from the March earthquake and tsunami.
This was not a good year for hedge funds and other types of alternative investments, in general (see FUNdamental facts for some reasons). Commercial real estate however, was one of the best performing asset class, owing to the reduced risk-perception by investors. This perception brought many investors back to the asset class and drove prices up significantly. Most appreciation was due to ‘perceived values or accounting valuations’ rather than transaction-based values.
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
December 2011: Capital Markets & U.S. Economic Update
Capital Mkts & US Econ Mthly Update Dec11
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
